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muccer
125 Posts
And just today, I came across another piece talking about how the UK government, following Canada and France's example is trying to figure out a new measurement. http://www.visionofhumanity.org/news/measuring-wellbeing-in-the-uk/ Would you agree that GDP needs to be replaced with a more holistic measure of well-being and if so, what do you think should be measured? | ||
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ZapRoffo
United States5544 Posts
GDP is a very specific economic measure that just tells how much "stuff" (more exactly: goods and services) a country produces/consumes. Economists even looking solely into their own field can't even draw general conclusions about the health of an nation's economy by looking at GDP alone, it's just 1 variable among many economic variables, let alone variables about sociological and other conditions. | ||
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muccer
125 Posts
On November 16 2010 14:02 ZapRoffo wrote: No one with any credibility uses GDP as a measure for overall progress in the first place, at least not in modern times, and there are lots of other measures that are used. GDP is a very specific economic measure that just tells how much "stuff" (more exactly: goods and services) a country produces/consumes. I disagree with your comments, most governments worldwide still use GDP as the main measure and politicians refer to it constantly as proof of success/failures. I am yet to see any government basing its policies on measures of citizen's well-being. So we might be talking about the shortcomings of GDP, but a substitute measure has yet to be developed. | ||
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Disregard
China10252 Posts
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FishForThought
Canada88 Posts
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geometryb
United States1249 Posts
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ZapRoffo
United States5544 Posts
http://en.wikipedia.org/wiki/Human_Development_Index The UN uses it. But people are working on this question quite a lot in modern academics. | ||
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ghrur
United States3786 Posts
On November 16 2010 14:15 geometryb wrote: gdp measures the amount of goods and services produced and is not a measure of wellbeing. Yup, econ 101. GDP per capita + Gini Coefficient might be a better way to try and get at the well-being of a nation, but not really. =/ | ||
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ZapRoffo
United States5544 Posts
On November 16 2010 14:10 muccer wrote: I disagree with your comments, most governments worldwide still use GDP as the main measure and politicians refer to it constantly as proof of success/failures. I am yet to see any government basing its policies on measures of citizen's well-being. So we might be talking about the shortcomings of GDP, but a substitute measure has yet to be developed. Yeah politicians and governments do it when it suits their agenda but it doesn't make it legitimate, and is something that has been realized in academia for a while. | ||
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zoniusalexandr
United States39 Posts
Since GDP is so highly correlated with these alternative measures, measuring well-being separately isn't likely to tell you anything new. Britain might be better off spending that money on something productive instead of a survey that tells you what you already know. | ||
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Boblion
France8043 Posts
http://en.wikipedia.org/wiki/Gini_coefficient | ||
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Elegy
United States1629 Posts
On November 16 2010 14:10 muccer wrote: I disagree with your comments, most governments worldwide still use GDP as the main measure and politicians refer to it constantly as proof of success/failures. I am yet to see any government basing its policies on measures of citizen's well-being. So we might be talking about the shortcomings of GDP, but a substitute measure has yet to be developed. No, governments and organizations use GDP as a measure of the economic health of the country, nothing more. GDP effectively measures the economic health of a nation in a particular regard- to use China as an example, steady and clockwork-esque growth of the domestic economy is used as a benchmark of economic health. As the second poster in the thread mentioned, there are dozens of other variables that tie into this (inflation would be a primary concern in this example). GDP tells us whether economies are growing or shrinking, certainly an applicable measurement in most cases to determine policy changes as per economic shifts. "Well-being" of citizens is highly subjective and arbitrary. How does one make policy based on such an ill-defined and arbitrary measurement? GDP per capita is a better measurement in most cases for well-being, I would say | ||
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ZapRoffo
United States5544 Posts
On November 16 2010 14:19 zoniusalexandr wrote: I'm all for alternative measures of progress (in fact that's what I'm writing my senior thesis about), but it turns out that GDP is already a pretty good measure, as mentioned here: http://freakonomics.blogs.nytimes.com/2010/01/04/in-defense-of-gdp/ Since GDP is so highly correlated with these alternative measures, measuring well-being separately isn't likely to tell you anything new. Britain might be better off spending that money on something productive instead of a survey that tells you what you already know. Except that like the US is far ahead in GDP of anyone else, but in most of the other measures they are middle of the highly developed countries pack. Or at least they place really highly in GDP per capita compared to in other things. | ||
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muccer
125 Posts
On November 16 2010 14:17 ZapRoffo wrote: Here's the most popular mainstream measure for this sort of thing: http://en.wikipedia.org/wiki/Human_Development_Index but people are working on this question quite a lot in modern academics. Thanks but let me ask you - how often do we hear world leaders talking about how their country is doing on the HDI? They all still talk about how GDP is going, and until that is changed, what policies focus on will not change. I am not saying researchers/academics have not been looking at different measures. What I am asking is about how can we get Governments move away from GDP and what should we get them focused on instead? | ||
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Elegy
United States1629 Posts
On November 16 2010 14:22 muccer wrote: Thanks but let me ask you - how often do we hear world leaders talking about how their country is doing on the HDI? They all still talk about how GDP is going, and until that is changed, what policies focus on will not change. I am not saying researchers/academics have not been looking at different measures. What I am asking is about how can we get Governments move away from GDP and what should we get them focused on instead? Not sure what you mean. Governments don't base economic policy decisions on GDP alone. Not even close. What politicians say and what actually factors into realistic policy decisions are oftentimes very very different. | ||
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H. Guderian
United States18 Posts
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muccer
125 Posts
On November 16 2010 14:26 Elegy wrote: Not sure what you mean. Governments don't base economic policy decisions on GDP alone. Not even close. What politicians say and what actually factors into realistic policy decisions are oftentimes very very different. This is where I am coming from: http://www.visionofhumanity.org/news/efforts-to-expand-replace-g-d-p-as-a-measure-of-progress/ We tend to consider GDP as a good indicator of whether the country is doing well or not, is progressing or not. Yet we know, that increased GDP it means nothing to most citizens. Which measures should we device to actually measure progress? In my view HDI does not do it. It puts all the countries on the same yardstick while I would say that progress for an American might look very different to progress for a Kenyan. | ||
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domovoi
United States1478 Posts
Gini coefficient is by far the worst idea, because it says absolutely nothing on its own. The fact that China and the US have similar Gini coefficients already says enough about the uselessness of the statistic (the poorest Americans are still richer than the rest of the world and only slightly poorer than the poorest Europeans; you can't even compare the poorest Americans to the poorest Chinese, it would be like comparing me to Bill Gates). If you want to factor in inequality into one easy number, then use median income. Yet we know, that increased GDP it means nothing to most citizens. Absolutely false. Unless the rich are buying and selling goods only to themselves rather than a publicly accessible market*, and only hiring themselves in the manufacture of such goods, then increased GDP affects anyone who participates in the labor and consumption markets. * And to a certain extent this is true in China, where governmental policies prevent many farmers from migrating to the cities. | ||
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uiCk
Canada1925 Posts
On November 16 2010 14:10 muccer wrote: I disagree with your comments, most governments worldwide still use GDP as the main measure and politicians refer to it constantly as proof of success/failures. I am yet to see any government basing its policies on measures of citizen's well-being. So we might be talking about the shortcomings of GDP, but a substitute measure has yet to be developed. It's a vague metric. Take any first level economics course, and you'll be thought it is one of many metrics used in observing economic well being of a state. | ||
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Goobus
Hong Kong587 Posts
First, we have the plain GDP number. Okay, this doesn't do much to measure progress as we see it (quality of life, etc). So, let's divide that by population. That gives us GDP per capita, and gives us an average of how much value each person creates per year. Well, that still doesn't help us too much, because there's other variables involved, such as prices, currency fluctuation. Of course, $10,000 doesn't buy you the same amount of stuff in every country. Okay, the final step: let's convert the GDP number from dollars into purchasing power. So, in effect, we measure GDP by how much stuff that income can buy. Hence, we have one of the most useful measures of quality of life: GDP per capita (purchasing power parity)! This number is far more useful than a plain GDP number, because it helps us determine (to a large extent) the quality of life in that country. So, a country could have the highest GDP, but if the costs in that country are ridiculously high, the average person in that country might as well be as poor as the person in another country who may make much less, but can buy the same amount of stuff. Of course, this is quite a general measure and it misses a lot of economic/humanitarian variables. But I think GDP, after some tinkering, is quite a useful measure of progress. If your GDP per capita (PPP) increases year after year, you KNOW that your population, on average, can buy more stuff, be it food, shelter, or other discretionary items. | ||
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